5 Easy Ways to Repair Your Credit History
We are going to talk about how to repair your credit history today. However, since this is a website about getting a bank account with bad credit, we first need to clear up a few confusions I’ve noticed people have when it comes to bank accounts and poor credit. One thing that seems to confuse people when it comes to bank accounts and getting rejected from opening one is the difference between bad credit history and bad banking history. There is a difference. You can have bad credit history and still get a bank account or you could have bad banking history and still have good credit. They are somewhat connected, but only indirectly.
What’s the big difference? Well, you get bad banking history by involving the bank in some sort of bad financial transaction. This could range from bank fraud, having a history of cashing bad checks (or bouncing checks frequently), taking out a bank loan/mortgage and being consistently late on the payments or defaulting completely, having the bank foreclose on your home, dipping into overdraft and failing to pay it back, not paying your bank account fees for a long period of time, etc.
Now as you see, many of these situations will also affect your credit history. Having a bank foreclose on your home will greatly impact your credit score, for example. But something like cashing bad checks might not. So as stated, there is a connection between bad banking credit and credit history, but it’s not the same thing.
Now if you have bad credit history, how can you actually repair it? This won’t necessarily help you open up a bank account if you have your name on the ChexSystems database, but it could help in other areas.
If you are trying to simply open a bank account and not directly repair your credit, I suggest you look at an alternative bank account option like a
Second Chance Account, or something like the Prepaid Visa Card which is basically like a secured credit card that you put money on, thus becoming like a bank account.
Now, to repair your regular credit history, there are some other things you will need to do. Let’s look at how to fix your credit score.
If you have a bad credit, you may be denied a loan when you need it the most. You may be deprived of mortgages, automobile loans and even credit cards. Thus, take up some serious steps immediately for your credit repair. You may easily fix your credit on your own. By doing this you may save a lot of money you would have wasted by hiring a credit repair company. You need to be calm and patient until you have removed all the bad remarks from your credit report. This article provides you with some information you need to follow in order to fix your credit on your own.
5 Steps to Fix Up Your Credit History
The Federal Trade Commission (FTC) also suggests you to fix your bad credit on your own. This will help you get rid of the scams that occur when you get help from the credit repair companies. Thus, follow these 3 steps to repair your bad credit record.
1. Get your credit reports – Order your credit reports from the two credit bureaus-Equifax and TransUnion. Experian no longer gives away credit reports to borrowers. You must get your credit reports from Equifax and TransUnion as creditors do not report to all three credit bureaus. Thus, it is important to get an idea what the two credit bureaus have to say about your financial situation. The most convenient way to repair your credit is to use one of the online and use a website to check your credit score for free. If you are willing to wait a few months and don’t mind using snail mail, you can order your free credit report from all three of the credit agencies like Equifax. It will take time for them to process your request, then mail it to you. You are allowed once free credit report to be sent to you each year.
2. Review your credit reports – Review your credit reports and find out if there are any inaccuracies. The credit bureaus accept information your creditors supply without verifying it at all. Therefore, it is your duty to find out if there are any errors in your credit report. Check for typing errors and/or incomplete or outdated information. Make a list of these items you need to dispute.
3. Dispute and document – In order to dispute the inaccurate items, you must complete the dispute form provided with the credit report. You may also write a letter to the credit bureaus disputing the items. Mention each and every mistake you come across in your credit report and point out why it is inaccurate. It’s better if you provide a photocopy of your credit report along with encircling the items you think are erroneous. Remember to provide supporting documents when you dispute any item. Everything should be in writing and you must keep copies and records of your dispute. These will act as proofs if required. If the credit bureau changes any information in your credit report, it will send you a copy of your credit report for free.
4. Pay off your debts – Paying off your debts is one of the essential steps in credit repair. Paying off your debts helps you improve your credit score. If you are not able to pay back your dues, contact your creditors and negotiate with them for an alternative repayment plan. You may also consolidate all your debts by taking out a consolidation loans. It is also advisable to create a budget and find out how much you can save each month. You can use this amount that you save to pay off your debts. Planning a budget will also help you manage your finances in a better way.
5. Don’t use credit cards often – Do not use your credit cards frequently. Try to use only one credit card. Stop using credit cards until and unless you pay off all your debts. Use your cards only for your basic needs. Make sure to pay off at least minimum payments on each of your credit cards. Do not forget to make your payments on time.
So why do you actually need to fix your credit? Well, say you want to buy a house. Credit history is incredibly important for home buying. Yes, yes, it is possible to buy a house with bad credit, but it’s difficult and you end up spending more money. It’s better to repair your credit so you can qualify for a home loan.
Make sure to not close your old accounts as it adversely affects your credit report. After you have paid off your debts try and reestablish your credit again by opening new accounts. However, along with following these steps you must be careful enough to manage your money in a better way and also stay to out the debt trap in future.